IT Outsourcing: Choosing a Contractor,
Setting a Goal, Setting a Process
As soon as you encounter the process of producing a product or service, you realize that the fullness of the tasks that were originally planned for the new company's activities is broader.
For example, any business today, in addition to the people directly involved in production, needs an accountant, a courier, a website (and thus people to create and maintain it), IT specialists, etc. So it turns out that for each of these ongoing tasks, an employee, or even an entire department, needs to be on staff? Fortunately, this is not always the case.
There is a place for outsourcing in today's business infrastructure.
What tasks are worth outsourcing
There are advantages and disadvantages of outsourcing, and as a result, some projects are easier to do within the company. For example:
You need to do a simple task all the time: manually test the interface or layout the same type of pages. It would be cheaper to hire a full-time junior developer rather than outsourcing this to someone else and overpaying.
R&D projects. It's difficult to make an estimate for them: it's not clear how much time or money the research will take. Outsourcing in this case could be very expensive.
The project has high-security requirements. For example, an enterprise can only work within a limited physical loop. In this case, a remote contractor is not suitable either.
Outsource tasks that are clear in their scope:
If you need to develop a website or an application. Such a project is easy to estimate, and at the output check the result. These are suitable conditions for outsourcing.
If the company lacks competence in some technology. For example, you used to write in Python all the time but needed to write one module in C. It's not cost-effective to hire a person in the team to do it, but it's fine to give it to an outside contractor.
When you need to put out a fire: something is broken, you need an emergency response, there is no time to recruit people for the team.
The main forms of outsourcing and their specifics
Outsourcing can be divided into two types: production and business process outsourcing. In manufacturing (or industrial) outsourcing, the production of a product or its components is partially or completely outsourced to a third party. An example of such outsourcing is the production of Nike. It has outsourced the production of sportswear, distribution, and sales. The company itself retained only the design of manufactured clothing and management of patents and trademarks. In small and medium-sized businesses, business process outsourcing (BPO) is most often used. It implies the outsourcing of individual business processes that are not core, business-forming for the company.
Such functions may include bookkeeping, office support, translation services, transportation services, support of computer networks and information infrastructure, advertising services, and security. Let's dwell on the most common of them in more detail.
Skills and conditions needed to succeed when outsourcing
Analysis of existing business processes will allow you to determine how standardized they are and correspond to reality. This is important primarily for companies in the B2B segment, where companies work "from the client" and in the pursuit of service quality forget about the unified processes, which leads to unjustified costs. The second important parameter for analysis is to find opportunities to optimize business processes and reduce costs. This can be done by changing or simplifying business processes, removing unnecessary activities within the process, and/or taking it to a cheaper region in terms of production.
Finally, by analyzing business processes, you can identify opportunities to automate or digitalize steps, or the entire process. If the process is standardized and conventional cost reduction methods are already applied or ineffective, automation can be a good solution. However, the ROI period for such a solution will be much longer than in the first two options. It is worth adding that all of these tasks can ideally be performed by the outsourcing provider to whom the function is outsourced. Of course, if it is the "right" and strategic partner.
Partnership and task delegation
One head is good, but two is better. Strategic partnerships and collaborations with other organizations can play a key role in business development. In software development, partnerships or industry association memberships provide opportunities to try out new tools and technologies, enter a new market, improve product quality, outperform competitors, and increase customer loyalty. That's why it's so important to know if your potential supplier has reliable and profitable partners.
How to control the work of the outsourcing company
The control over the quality of outsourcing company services can consist of two blocks:
The "result" parameters which can be digitized: KPI's, SLA, achievement of business indicators, they can include satisfaction;
The "process" parameters which are more difficult to digitize in a moment: the presence of regular communication, business reviews for the period, the presence of a business continuity plan - in general, everything that makes the service provision process transparent for the client.
Both blocks are important for the outsourcing customer, without regular communication it is impossible to provide a service because the success of the implementation depends not only on the provider but also on the customer.
Only an even more competent specialist can supervise a competent specialist promptly, so building service of current control (internal audit) is a complex and costly task that only large enterprises can accomplish. Medium-sized businesses, much less small ones, can rarely afford it. The solution available to small and medium-sized businesses is the final control - a tax and legal audit of the elapsed period (not to be confused with a mandatory audit of accounts). Such control is final (i.e., it will not prevent an error, but will help correct it before it turns into a loss). The cost of such an audit will not exceed 20% of the budget of the relevant service for the audited period. First, the audit will show how much money was spent on the maintenance of the service justified, and second, given the scale of the possible consequences of errors not detected in time, such costs are not excessive even for the smallest business.
Whether to outsource tasks and who will be a subcontractor, an agency or a freelancer, is up to you to decide. The main thing is to define your goals and means in relation to outsourcing. Successful work with your partners!